October 7, 2014

SEC Changes Approach with New Broken-Windows Policy

by Katayun I. Jaffari and Kimberly W. Klayman
The Legal Intelligencer

Reprinted with the permission of The Legal Intelligencer.

On Sept. 10, the U.S. Securities and Exchange Commission (SEC) brought an unprecedented 28 charges against corporate insiders for a combined monetary penalty of $2.6 million for failure to timely file Section 16 and Section 13(d) and Section 13(g) reports. This so-called "enforcement sweep" suggests that the SEC has changed its approach to combating insider-trading violations and is, for the first time, using untimely filings of required disclosure reports as proxies for
insider-trading violations. In the past, the SEC used its resources to attack a few heavyweight offenders in the hopes of deterring insider trading through harsh sentences. By aiming for quantity over quality, the SEC has demonstrated a greater willingness to pursue suspected violations of varying degrees. ...